Deforestation

These French banks that finance the destruction of the world's forests

Crédit Agricole, BNP and Natixis injected 2 billion euros into deforestation

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According to data analysed by the NGO Global Witness, between 2013 and 2019, the French financial sector financed five of the six most harmful agro-industrial companies directly or indirectly involved in deforestation activities in the world's three largest tropical forests, namely the Brazilian Amazon, the Congo Basin and Papua New Guinea. This support, amounting to nearly €2 billion, makes France the second largest contributor of funds to these companies throughout the European Union.

The fires in the Brazilian Amazon last summer were a cruel illustration of the war that humanity can wage against the planet. Although more discreet, similar scenes take place every year in the world's tropical forests to make way for the activities of large agro-industrial companies, far from the horrified gaze of television viewers around the world. Yet these forests are the planet's first line of defence against climate change. A study famous, published in 2017, estimates that forests and other ecosystems could contribute, by 2030, more than a third of the total carbon emission reduction needed to limit global warming to a 2° Celsius increase.

However, more than 300 million hectares of forest cover were destroyed between 2001 and 2015, almost the size of India. According to a recent study, about a quarter of this loss is attributable to staple crops such as palm oil and intensive cattle farming. The study also found that in Southeast Asia, deforestation linked to the development of commodities such as palm oil is responsible for the loss of 78 % of forest cover.

In the face of public opinion shocked by images of deforestation, it is not surprising that many banks and investors proudly brandish ethical business policies, in which they pledge not to finance companies that destroy and burn precious tropical forests. However, these same financial institutions often violate their own promises without any limits.

The survey carried out by the NGO specialising in the fight against the plundering of natural resources, Global Witness, reveals now the scale and magnitude of these financial flows - and how whole swathes of global finance are encouraging the destruction of the world's largest tropical forests.

At present, companies that cut down forests to produce palm oil, beef and rubber can have new projects financed at attractive rates offered by major banking centres in the United States, Europe and Asia. Global Witness investigated the financing of six large agribusiness companies: three operating in the Amazon, two in the Congo Basin and one in New Guinea.

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Global Witness found that between 2013 and 2019, they were funded to the tune of US$44 billion by more than 300 investment companies, banks and pension funds based around the world. Some of the biggest names in global finance - including Barclays, Deutsche Bank, HSBC, Santander and Standard Chartered - have, between 2013 and 2019, financed tens of billions of dollars for companies directly or indirectly involved in the deforestation of the world's largest tropical forests. Major investment banks, including JPMorgan Chase, Goldman Sachs, Bank of America and Morgan Stanley, are also involved. French banks are not to be outdone: three of its main flagships have financed deforestation to the tune of $2 billion.

Duty of care

In March 2017 France enacted a pioneering law on the duty of care. It requires French companies, including banks, to identify, mitigate and prevent human rights violations and environmental damage in the course of their operations.

Despite this law, three French banks - BNP Paribas, Natixis and Crédit Agricole - support companies operating in deforestation activities. This is what the NGO Global Witness reveals, in an report which has just been published. These banks display virtue on the façade but finance, behind the scenes, the destruction of the world's largest forest massifs.   

In 2015, BNP Paribas signed a "zero net deforestation by 2020" commitment to finance the palm oil, soybean, timber and beef sectors under the "Zero Net Deforestation by 2020" initiative. Banking Environment Initiative. Crédit Agricole also has a policy covering deforestation, without having set a deadline for zero deforestation targets, and limited to two commodities that pose a risk to forests. Natixis, for its part, states that it has an internal policy on palm oil, so the affected communities and stakeholders are not aware of the bank's exact commitments.

French banks are among the companies covered by the March 2017 Act. The law requires banks to report on the measures they take to manage any risk that the financing they provide contributes to deforestation. However, since the adoption of this law, the three French banks examined have still not publicly reported in their annual 'due diligence plans' on the risks specifically identified as posed by companies exposed to, involved in or linked to deforestation and related human rights violations.

BNP Paribas and deforestation in Brazil

BNP Paribas is number one in the French banking sector and number two in the European Union. According to the NGO, the bank has financial links with several companies whose operations present high risks of deforestation.

BNP Paribas is one of the banks that coordinated a USD 500 million "transition bond" for Marfrig, the Brazilian beef trader, in July 2019. This transaction came at a time when deforestation in the Amazon is accelerating rapidly, benefiting many players exploiting the forest for livestock farming or the cattle industry more broadly.

The NGO's analysts have also documented BNP Paribas' role as "...a leading player in the field of financial services...". Joint Lead Manager "in the subscription of a US$1 billion bond in May 2019 for Marfrig's subsidiary, NBM US Holdings. The deal comes at a time of increasing human rights threats across Brazil. In this context, banks and other actors would be expected to carry out more robust due diligence.

According to the report, in November 2019, BNP Paribas managed US$1 million in Sinochem International bonds. Sinochem is the majority shareholder of Halcyon Agri. According to GreenpeaceIn 2016, Halcyon Agri took control of rubber plantations in Cameroon on land that had been deforested in the past and then cleared an additional 2,300 hectares of land from April 2017 to April 2018. The project was also criticized because of its impact on the tribal forest communities in the region - including the indigenous Baka forest peoples - who have reportedly been forced to leave their homes and denied access to their customary lands.

Natixis in Gabon

In 2019, French investment bank Natixis contributed US$50 million to a three-year syndicated revolving credit facility for one of the world's largest agribusiness groups, Olam International. This is despite the existence of a report prepared in 2016 by the NGO Mighty Earth which calculates that since 2012, Olam has deforested approximately 20,000 hectares of forest in Gabon. Olam continues to operate the plantation on the land it has cleared.

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We strongly refute allegations of irresponsible deforestation or land conversion.« A spokesman for Olam told AFP. He said his group was working closely with Gabon to find "the best solution to the problem. a balance between development needs and the imperative to preserve forests"

Crédit Agricole in Cameroon

Crédit Agricole has decided to enter into a business relationship with the rubber company Halcyon Agri despite the deforestation caused by its operations in Cameroon. Crédit Agricole appears as the "main banker" in Halcyon Agri's 2018 annual report. The bank has also played the role of Joint Lead Manager "on a US$300 million bond for Halcyon's majority shareholder, the Chinese group Sinochem in July 2017, through which it directly provided underwriting services in the amount of US$10 million.

When asked about these activities, the bank told Global Witness that Sinochem was involved in sustainability initiatives. The bank said that Halcyon Agri had responded to long-standing problems. with the publication of a corporate responsibility policy in March 2016 and a sustainable natural rubber supply chain policy, as well as through various partnerships with NGOs and a stakeholder engagement process ".

Urgent behavioural change

Yet France is one of the few countries to have already recognized the role of its own consumption and investment in increasing deforestation, and it has committed itself to addressing this by adopting an National Strategy to combat imported deforestation. In this regard, France has committed to making financing responsible and to encouraging financial actors to systematically integrate the fight against deforestation into their investment policies and strategies. But these initiatives, strategies and legislation must now be followed by urgent and ambitious measures to transform corporate behaviour.

It's an emergency. Sonia Guajajara, Executive Coordinator of the Indigenous Peoples' Network of Brazil, appeals for help: " In recent years, the dangers faced by the indigenous peoples of the Amazon and Brazil's biomes as a whole have increased. Agro-industry is a major driver of deforestation in the Amazon and is at the origin of a growing number of threats to indigenous communities who, through their way of life, protect the forests. We are silenced, threatened, imprisoned and even killed. Our forests are the forests of the planet and the world is on the verge of their destruction. We must act together, and there is no time left. International finance is fuelling the destruction of our forests, our homes, our cultures. Last year we visited twelve European countries to warn of the current situation in Brazil and to call for urgent measures to combat this barbarism. It is vital that European governments adopt legislation to ensure that their banks and companies do not support this destruction. "

According to the IPCC, we have only eleven years left to prevent climate change from becoming irreversible. To avoid this point of no return, we need to keep our forests alive because their destruction is the major driver of greenhouse gas emissions. Forests do not have to be destroyed for agro-industry to cultivate the land and raise livestock. We do not have to choose between protecting forests and producing food. It would be short-sighted to do so.

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